Exhibit 10.7


 


THESE SECURITIES HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR UNDER THE SECURITIES LAWS OF ANY
STATE OR JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE
TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION, IN REASONABLY
ACCEPTABLE FORM AND SCOPE, OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY, THAT REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS ARE NOT
REQUIRED UNDER ANY SUCH LAWS.


 


CRDENTIA
CORP.


 


WARRANT TO PURCHASE SHARES OF COMMON STOCK


(Expires June 30, 2013)


 


	
  Warrant
  No. CV-2

  	
   

  	
  525,000 Shares of Common Stock

  



 


FOR VALUE RECEIVED, subject
to the provisions set forth below, the undersigned, CRDENTIA CORP., a Delaware
corporation (the “Company”),
hereby certifies that ComVest Capital, LLC, a Delaware limited liability
company, or its registered assigns (the “Holder”),
is entitled to purchase from the Company up to five hundred twenty-five
thousand (525,000) fully paid and nonassessable shares (the “Warrant Shares”) of the Company’s common
stock, $.0001 par value per share (the “Common
Shares”), for cash at a price of $0.35 per share (the “Exercise Price”) at any time and from time to time from and
after the date hereof, and until 5:00 p.m. (Central time) on June 30,
2013 (the “Expiration Date”), upon
surrender to the Company at its principal office (or at such other location as
the Company may advise the Holder in writing) of this Warrant properly endorsed
with the Notice of Exercise attached hereto duly filled in and signed and, if
applicable, upon payment in cash or by check of the aggregate Exercise Price
for the number of shares for which this Warrant is being exercised determined
in accordance with the provisions hereof. 
The Exercise Price and the number of shares purchasable hereunder are
subject to adjustment as provided in Section 3 of this Warrant.


 


This Warrant is issued
pursuant to that certain Amended and Restated Term Loan Agreement dated as of June 30,
2008 by and between ComVest Capital, LLC and the Company (the “Loan Agreement”).


 


1.                                      Exercise
of Warrant.


 


1.1.                            Exercise.  This Warrant shall be exercisable at any time
and from time to time from the date hereof until the Expiration Date, and this
Warrant shall expire on the Expiration Date. 
Upon exercise of this Warrant, the Exercise Price shall be payable in
cash or by check.  This Warrant may be
exercised in whole or in part so long as any exercise in part hereof would not
involve the issuance of fractional Warrant Shares or the payment of fractional
cents.  If exercised in part, the Company
shall deliver to the Holder a new Warrant, identical in form to


 

















 


this
Warrant, in the name of the Holder, evidencing the right to purchase the number
of Warrant Shares as to which this Warrant has not been exercised, which new
Warrant shall be signed by an appropriate officer of the Company.  The term “Warrant” as used herein shall
include any subsequent Warrant issued as provided herein.


 


1.2.                            Exercise
Procedures; Delivery of Certificate.  Upon surrender of this Warrant with a duly
executed Notice of Exercise in the form of Annex A attached hereto,
together with payment of the Exercise Price for the Warrant Shares purchased,
at the Company’s principal executive offices (the “Designated Office”), the Holder shall be entitled to receive a
certificate or certificates for the Warrant Shares so purchased.  The Company agrees that the Warrant Shares
shall be deemed to have been issued to the Holder as of the close of business
on the date on which this Warrant shall have been surrendered together with the
Notice of Exercise and payment for such Warrant Shares.


 


1.3.                            Cashless
Exercise.  Anything
elsewhere contained herein to the contrary notwithstanding, in lieu of payment
of the Exercise Price, a Holder may exercise this Warrant, in whole or in part,
by presentation and surrender of this Warrant to the Company, together with a
Cashless Exercise Form in the form attached hereto as Annex B
(or a reasonable facsimile thereof) duly executed (a “Cashless Exercise”).  Such presentation and surrender shall be
deemed a waiver of the Holder’s obligation to pay all or any portion of the
Exercise Price, as the case may be.  In
the event of a Cashless Exercise, the Holder shall exchange this Warrant for
that number of Common Shares determined by multiplying the number of Common
Shares for which this Warrant is being exercised by a fraction, (a) the
numerator of which shall be the difference between (i) the then current
market price per Common Share, and (ii) the Exercise Price, and (b) the
denominator of which shall be the then current market price per Common
Share.  For purposes of any computation
under this Section l.3, the then current market price per Common Share at
any date shall be deemed to be the average of the daily trading price for the
ten (10) consecutive trading days immediately prior to the Cashless
Exercise.  If, during such measuring
period, there shall occur any event which gives rise to any adjustment of the Exercise
Price, then a corresponding adjustment shall be made with respect to the
closing prices of the Common Shares for the days prior to the Effective Date of
such adjustment event.  As used herein,
the term “trading price” on any relevant date means (A) if the Common
Stock is listed for trading on the New York Stock Exchange, the American Stock
Exchange, the NASDAQ Global Market, or the NASDAQ Global Select Market, the
closing sale price (or, if no closing sale price is reported, the last reported
sale price) of the Common Stock (regular way), or (B) if the Common Stock
is not so listed but quotations for the Common Stock are reported on the OTC
Bulletin Board, the most recent closing price as reported on the OTC Bulletin
Board.


 


1.4.                              Holder’s
Put Options.  (a) 
In the event that and at such time as the Company or any of its stockholders
enters into a binding agreement with respect to any Sale (as such term is
defined in the Loan Agreement) or enters into any underwriting agreement or
files any registration statement in respect of a public offering of Common
Shares registered with the Securities and Exchange Commission (a “Public Offering”), or (if sooner) on that date which is
thirty (30) days prior to any payment or required payment in full of the Obligations
(as such term is defined in the Loan Agreement), the Company shall, in addition
to any notice required under the Loan Agreement or the Registration Rights
Agreement (as such term is defined in the Loan Agreement), give written notice
to the Holder (or, if applicable, the holder of the Warrant


 


2

















 


Shares)
setting forth in reasonable detail the circumstances and material terms of the
subject Sale agreement, Public Offering agreement, underwriting agreement, or
registration statement, or the pendency of such payment (as the case may
be).  Subject to and in accordance with
the provisions of this Section 1.4, the Holder shall have the right and
option (the “Initial Put Option”), exercisable
at any time (i) prior to the date of consummation of the proposed Sale or
Public Offering or such payment in full (as set forth in the Company’s notice
hereunder), (ii) prior to the Term Notes Maturity Date (as such term is
defined in the Loan Agreement), or (iii) upon the occurrence and during
the continuance of an Event of Default (as such term is defined in the Loan
Agreement) or any other event or circumstance which causes, effects or requires
any payment in full under the Loan Agreement (each, a “Triggering
Event”), to require the Company to redeem and purchase, for a cash
purchase price of $420,000 (the “Initial Option Purchase
Price”), 80% of this Warrant (or, if applicable, 80% of the Warrant
Shares) from the Holder (which term, for purposes of this Section 1.4, shall
include each holder of Warrant Shares). 
The Option Purchase Price shall be payable simultaneously with the
consummation of the Triggering Event and the payment of the other Obligations
under the Loan Agreement.  In addition,
if the Initial Put Option is not exercised, the Holder shall have the further
right and option, exercisable upon thirty (30) days’ written notice to the
Company given at any time during the period from (A) the earlier of the
lapse or expiration of the Initial Put Option or March 1, 2011 through (B) June 30,
2012, to require the Company to redeem and purchase 80% of this Warrant (or, if
applicable, 80% of the Warrant Shares) for a cash purchase price of $516,000;
and if such option is not exercised, the Holder shall have the further right
and option, exercisable upon thirty (30) days’ written notice to the Company
given at any time from July 1, 2012 through June 30, 2013, to require
the Company to redeem and purchase 80% of this Warrant (or, if applicable, 80%
of the Warrant Shares) for a cash purchase of $635,000; and such options,
together with the Initial Put Option, are each referred to herein as a “Put Option”, and the respective purchase prices applicable
to such additional Put Options, together with the Initial Option Purchase Price,
are each referred to herein as an “Option Purchase Price”.


 


(b)                                 Each Put Option
shall be exercisable at any time within the applicable time frame provided in Section 1.4(a) above,
by the Holder providing a completed Put Option exercise form in the form
attached hereto as Annex C (or a reasonable facsimile thereof) duly
executed, to the Company at the Designated Office.  Upon payment of the applicable Option
Purchase Price by the Company to the Holder, the Holder shall surrender this
Warrant (or the certificate(s) representing the Warrant Shares, as
applicable) to the Company, against delivery to the Holder of a replacement
Warrant (or certificate(s) representing Warrant Shares, as applicable)
representing the portion of this Warrant or the Warrant Shares (as applicable)
not purchased by the Company hereunder.


 


(c)                                  In the event
that any proposed Sale or Public Offering which gave rise to the exercise of
the Initial Put Option is abandoned or is not consummated for any reason or for
no reason, then such exercise of the Initial Put Option shall be null and void ab
initio, and (i) the Initial Put Option shall thereafter be
applicable and exercisable in connection with any subsequent proposed Sale or
Public Offering, or any other Triggering Event, in accordance with this Section 1.4,
and (ii) the further Put Options provided in the last sentence of Section 1.4(b) above
shall remain unimpaired.


 


3

















 


2.                                      Transfer;
Issuance of Stock Certificates; Restrictive Legends.


 


2.1.                            Transfer.  Each transfer of this Warrant and all rights
hereunder, in whole or in part, shall be registered on the books of the Company
to be maintained for such purpose, upon surrender of this Warrant at the
Designated Office, together with a written assignment of this Warrant in the
form of Annex C attached hereto duly executed by the Holder or its
agent or attorney.  Upon such surrender
and delivery, the Company shall execute and deliver a new Warrant or Warrants
in the name of the assignee or assignees and in the denominations specified in
such instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, if any.  A Warrant may be exercised by the new Holder
for the purchase of Warrant Shares without having a new Warrant issued.  Prior to due presentment for registration of
transfer thereof, the Company may deem and treat the registered Holder of this
Warrant as the absolute owner hereof (notwithstanding any notations of
ownership or writing thereon made by anyone other than a duly authorized
officer of the Company) for all purposes and shall not be affected by any
notice to the contrary.  All Warrants
issued upon any assignment of Warrants shall be the valid obligations of the
Company, evidencing the same rights and entitled to the same benefits as the
Warrants surrendered upon such registration of transfer or exchange.  The foregoing notwithstanding, no portion of
this Warrant shall be transferred or assigned (except to an affiliate of
ComVest Capital, LLC) prior to the Commencement Date.


 


2.2.                            Stock
Certificates. 
Certificates for the Warrant Shares shall be delivered to the Holder
within five (5) business days after the rights represented by this Warrant
shall have been exercised pursuant to Section 1, and a new Warrant
representing the right to purchase the Common Shares, if any, with respect to
which this Warrant shall not then have been exercised shall also be issued to
the Holder within such time.  The issuance
of certificates for Warrant Shares upon the exercise of this Warrant shall be
made without charge to the Holder hereof including, without limitation, any
documentary, stamp or similar tax that may be payable in respect thereof; provided,
however, that the Company shall not be required to pay any income tax to
which the Holder hereof may be subject in connection with the issuance of this
Warrant or the Warrant Shares.


 


2.3.                            Restrictive
Legend. Except as otherwise provided in this Section 2, each certificate
for Warrant Shares initially issued upon the exercise of this Warrant and each
certificate for Warrant Shares issued to any subsequent transferee of any such
certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:


 


“THESE SECURITIES HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION IN FORM AND
FROM COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED.”


 


Notwithstanding the
foregoing, the legend requirement of this Section 2.3 shall terminate as
to any particular Warrant Shares when (i) such Warrant Shares are
transferred pursuant to an 


 


4

















 


effective resale
registration statement, as contemplated in the Amended and Restated
Registration Rights Agreement between the Company and the Holder dated as of June 30,
2008, or (ii) the Company shall have received from the Holder thereof an
opinion of counsel in form and substance reasonably acceptable to the Company
that such legend is not required in order to ensure compliance with the
Securities Act.  Whenever the restrictions
imposed by this Section 2.3 shall terminate, the Holder or subsequent
transferee, as the case may be, shall be entitled to receive from the Company
without cost to such Holder or transferee a certificate for the Warrant Shares
without such restrictive legend.


 


3.                                      Adjustment
of Number of Shares; Exercise Price; Nature of Securities Issuable Upon
Exercise of Warrants.


 


3.1.                            Exercise
Price; Adjustment of Number of Shares.  The Exercise Price and the number of shares
purchasable hereunder shall be subject to adjustment from time to time as
hereinafter provided; provided, however, that, notwithstanding
the below, in no case shall the Exercise Price be reduced to below the par
value per share of the class of stock for which this Warrant is exercisable at
such time.


 


3.2.                            Adjustments
Upon Distribution, Subdivision or Combination.  If the Company, at any time or from time to
time after the issuance of this Warrant, shall (a) make a dividend or
distribution on its Common Shares payable in Common Shares, (b) subdivide
or reclassify the outstanding Common Shares into a greater number of shares, or
(c) combine or reclassify the outstanding Common Shares into a smaller
number of shares, the Exercise Price in effect at that time and the number of
Warrant Shares into which the Warrant is exercisable at that time shall be
proportionately adjusted effective as of the record date for the dividend or
distribution or the effective date of the subdivision, combination or
reclassification.


 


3.3.                            Adjustment
Upon Other Distributions.  If
the Company, at any time or from time to time after the issuance of this
Warrant, makes a distribution to the holders of Common Shares which is payable
in cash, securities of the Company other than Common Shares or any other
property, then, in each such event, provision shall be made so that the Holder
shall receive upon exercise of this Warrant, in addition to the number of
Warrant Shares, the amount of such cash, securities or other property which
would have been received if the portion of the Warrant so exercised had been
exercised for Warrant Shares on the date of such event, subject to adjustments
subsequent to the date of such event with respect to any such distributed
securities which shall be on terms as nearly equivalent as practicable to the
adjustments provided in this Section 3 and all other adjustments under
this Section 3.


 


3.4.                            Adjustment
Upon Merger, Consolidation or Exchange.  If at any time or from time to time after the
issuance of this Warrant there occurs any merger, consolidation, arrangement or
statutory share exchange of the Company with or into any other person or
company, then, in each such event, provision shall be made so that the Holder
shall receive upon exercise of this Warrant the kind and amount of shares and other
securities and property (including cash) which would have been received upon
such merger, consolidation, arrangement or statutory share exchange by the
Holder if the portion of this Warrant so exercised had been exercised for
Warrant Shares immediately prior to such merger, consolidation, arrangement or
statutory share exchange, subject to adjustments for events subsequent to the
effective date of 


 


5

















 


such merger, consolidation, arrangement or statutory share exchange
with respect to such shares and other securities which shall be on terms as
nearly equivalent as practicable to the adjustments provided in this Section 3
and all other adjustments under this Section 3.


 


3.5.                            Adjustments
for Recapitalization or Reclassification.  If, at any time or from time to time after
the issuance of this Warrant, the Warrant Shares issuable upon exercise of this
Warrant are changed into the same or a different number of securities of any
class of the Company, whether by recapitalization, reclassification or
otherwise (other than a merger, consolidation, arrangement or statutory share
exchange provided for elsewhere in this Section 3), then, in each such
event, provision shall be made so that the Holder shall receive upon exercise
of this Warrant the kind and amount of securities or other property which would
have been received in connection with such recapitalization, reclassification
or other change by the Holder if the portion of this Warrant so exercised had
been exercised immediately prior to such recapitalization, reclassification or
change, subject to adjustments for events subsequent to the effective date of
such recapitalization, reclassification or other change with respect to such
securities which shall be on terms as nearly equivalent as practicable to the
adjustments provided in this Section 3 and all other adjustments under
this Section 3.


 


3.6                               Adjustment
Upon Certain Issuances of Common Stock.


 


(a)                                  If the Company,
at any time or from time to time, issues or sells any Additional Shares of
Common Stock (as defined below), other than as provided in the foregoing
subsections of this Section 3, for a price per share (which, in the case
of options, warrants, convertible securities or other rights, includes the
amounts paid therefor plus the exercise price, conversion price or other such
amounts payable thereunder) that is less than the Exercise Price then in
effect, then and in each such case, the then applicable Exercise Price shall
automatically be reduced as of the opening of business on the date of such
issue or sale, to a price determined by multiplying the Exercise Price then in
effect by a fraction (i) the numerator of which shall be (A) the
number of Common Shares deemed outstanding (as determined below) immediately
prior to such issue or sale, plus (B) the number of Common Shares which
the aggregate consideration received by the Company for the total number of
Additional Shares of Common Stock so issued would purchase at such Exercise
Price, and (ii) the denominator of which shall be the number of Common
Shares deemed outstanding (as defined below) immediately prior to such issue or
sale plus the total number of Additional Shares of Common Stock so issued; provided,
however, that upon the expiration or other termination of options,
warrants or other rights to purchase or acquire Common Shares which triggered
any adjustment under this Section 3.6, and upon the expiration or
termination of the right to convert or exchange convertible or exchangeable
securities (whether by reason of redemption or otherwise) which triggered any
adjustment under this Section 3.6, if any thereof shall not have been
exercised, converted or exchanged, as applicable, the number of Common Shares
deemed to be outstanding pursuant to this Section 3.6(a) shall be
reduced by the number of shares as to which options, warrants, and rights to
purchase or acquire Common Shares shall have expired or terminated unexercised,
and as to which conversion or exchange rights shall have expired or terminated
unexercised, and such number of shares shall no longer be deemed to be
outstanding; and the Exercise Price then in effect shall forthwith be
readjusted and thereafter be the price that it would have been had adjustment
been made on the basis of the issuance only of the Common Shares actually
issued.  For purposes of the preceding
sentence, the number of Common Shares deemed 


 


6

















 


to
be outstanding as of a given date shall be the sum of (x) the number of
Common Shares actually outstanding, (y) the number of Common Shares for
which this Warrant could be exercised on the day immediately preceding the
given date, and (z) the number of Common Shares which could be obtained
through the exercise or conversion of all other rights, options and convertible
securities outstanding on the day immediately preceding the given date.  “Additional
Shares of Common Stock” shall mean all Common Shares, and all
options, warrants, convertible securities or other rights to purchase or acquire
Common Shares, issued by the Company other than (i) Common Shares issued
pursuant to the exercise of options, warrants or convertible securities
outstanding on June 30, 2008 (including, without limitation, this Warrant)
(without giving effect to any voluntary reduction of the exercise price or
conversion price thereunder), or hereafter issued from time to time pursuant to
and in accordance with stock purchase or stock option plans as in effect on June 30,
2008, and (ii) Common Shares and/or options, warrants or other Common
Share purchase rights for up to an aggregate of 5,000,000 Common Shares (such
number to be subject to adjustment in accordance with Section 3.2 above),
where such shares, options, warrants or other rights are issued both (A) at
prices or with exercise prices per Common Share at or above the then-current
fair market value of a Common Share, as determined in good faith by the Board
of Directors of the Company or the Compensation Committee thereof, and (B) to
employees, officers or directors of, or consultants to, or acquisition targets
of, the Company or any subsidiary pursuant to stock purchase or stock option
plans or other arrangements that are approved by the Company’s Board of
Directors or the Compensation Committee thereof, and/or by the Company’s
stockholders.


 


(b)                                 In the event
that the exercise price, conversion price, purchase price or other price at
which Common Shares are purchasable pursuant to any options, warrants,
convertible securities or other rights to purchase or acquire Common Shares is
reduced at any time or from time to time (other than under or by reason of
provisions designed to protect against dilution), then, upon such reduction
becoming effective, the Exercise Price then in effect hereunder shall forthwith
be decreased to such Exercise Price as would have been obtained had the
adjustments made and required under this Section 3.6 upon the issuance of
such options, warrants, convertible securities or other rights been made upon
the basis of (and the total consideration received therefor) (i) the
issuance of the number of Common Shares theretofore actually delivered upon the
exercise, conversion or exchange of such options, warrants, convertible
securities or other rights, (ii) the issuance of all of the Common Shares
and all other options, warrants, convertible securities and other rights to
purchase or acquire Common Shares issued after the issuance of the modified
options, warrants, convertible securities or other rights, and (iii) the
original issuance at the time of the reduction of any such options, warrants,
convertible securities or other rights then still outstanding.


 


(c)                                  In no event
shall an adjustment under this Section 3.6 be made if it would result in
an increase in the then applicable Exercise Price.


 


3.7.                            Certificate
of Adjustment.  Whenever
the Exercise Price and/or the number of Warrant Shares receivable upon exercise
of this Warrant is adjusted, the Company shall promptly deliver to the Holder a
certificate of adjustment, setting forth the Exercise Price and/or Warrant
Shares issuable after adjustment, a brief statement of the facts requiring the
adjustment and the computation by which the adjustment was made.  The certificate of adjustment shall be prima
facie evidence of the correctness of the adjustment.


 


7
















 


3.8.                            Successive
Adjustments.  The
provisions of this Section 3 shall be applicable successively to each
event described herein which may occur subsequent to the issuance of this
Warrant and prior to the exercise in full of this Warrant.


 


3.9.                            No
Impairment.  The Company will not, by amendment
of its incorporation documents or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder.  Without limitation of the foregoing, the
Company shall not take any action which would cause the par value of the Common
Shares to exceed the then-effective Exercise Price.


 


4.                                      Registration;
Exchange and Replacement of Warrant; Reservation of Shares.  The Company shall keep at the Designated
Office a register in which the Company shall provide for the registration,
transfer and exchange of this Warrant. 
The Company shall not at any time, except upon the dissolution,
liquidation or winding-up of the Company, close such register so as to result
in preventing or delaying the exercise or transfer of this Warrant.


 


The Company may deem and
treat the person in whose name this Warrant is registered as the Holder and
owner hereof for all purposes and shall not be affected by any notice to the
contrary, until presentation of this Warrant for registration or transfer as
provided in this Section 4.


 


Upon receipt by the Company
of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant and (in case of loss, theft or destruction) of the
Holder’s indemnity in form satisfactory to the Company, and (in the case of
mutilation) upon surrender and cancellation of this Warrant, the Company will
(in the absence of notice to the Company that the Warrant has been acquired by
a bona fide purchaser) make and deliver a new Warrant of like tenor in lieu of
this Warrant, without requiring the posting of any bond or the giving of any
security.


 


The Company shall at all
times reserve and keep available out of its authorized shares of capital stock,
solely for the purpose of issuance upon the exercise of this Warrant, such
number of Common Shares as shall be issuable upon the exercise hereof.  The Company covenants and agrees that, upon
exercise of this Warrant and payment of the Exercise Price therefor, if
applicable, all Warrant Shares issuable upon such exercise shall be duly and
validly authorized and issued, fully paid and nonassessable.


 


5.                                      Investment
Representations.  The Holder,
by accepting this Warrant, covenants and agrees that, at the time of exercise
of this Warrant, if the Warrant Shares shall not then be the subject of an
effective registration statement under the Act, the securities acquired by the
Holder upon exercise hereof are for the account of the Holder or are being
acquired for its own account for investment and are not acquired with a view
to, or for sale in connection with, any distribution thereof (or any portion
thereof) and with no present intention (at such time) of offering and
distributing such securities (or any portion thereof), except in compliance
with applicable federal and state securities laws.


 


8

















 


6.                                      Fractional
Warrants and Fractional Shares.  If the number of Warrant Shares purchasable
upon the exercise of this Warrant is adjusted pursuant to Section 3
hereof, the Company shall nevertheless not be required to issue fractions of
shares upon exercise of this Warrant or otherwise, or to distribute
certificates that evidence fractional shares. 
With respect to any fraction of a share called for upon any exercise
hereof, the Company shall pay to the Holder an amount in cash equal to such
fraction multiplied by the current market value of a Common Share (determined
in accordance with the last sentence of Section 1.3 above).


 


7.                                      Warrant
Holders Not Deemed Stockholders.  No Holder of this Warrant shall, as such, be
entitled to vote or to receive dividends (except to the extent provided in Section 3.2
above) or be deemed the holder of Warrant Shares that may at any time be
issuable upon exercise of this Warrant, nor shall anything contained herein be
construed to confer upon the Holder of this Warrant, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any recapitalization,
issue or reclassification of stock, change of par value or change of stock to
no par value, consolidation, merger or conveyance or otherwise), or to receive
notice of meetings, or subscription rights, until such Holder shall have
exercised this Warrant and been issued Warrant Shares or deemed to have been
issued Warrant Shares in accordance with the provisions hereof.


 


8.                                      Notices.  Any notice which is required to be given by
this Warrant must be in writing, and shall be given or served, unless otherwise
expressly provided herein, by depositing the same in the United States Mail,
postpaid and certified and addressed to the party to be notified, with return
receipt requested, or by delivering the same by courier or in person to such
party (or, if the party or parties to be notified be incorporated, to an
officer of such party).  Notice deposited
in the mail, postpaid and certified with return receipt requested, shall be
deemed received and effective upon the deposit in a proper United States depository.  Notice given in any other manner shall be
effective only if and when received by the party to be notified.  For the purposes of notice, the addresses of
the parties for the receipt of notice hereunder are:


 


	
   

  	
  If to the Company:

  	
   

  
	
   

  	
  Crdentia
  Corp.

  	
   

  
	
   

  	
  5001
  LBJ Freeway, Suite 850

  	
   

  
	
   

  	
  Dallas,
  TX  75244

  	
   

  
	
   

  	
  Attention:
  James TerBeest

  	
   

  
	
   

  	
  Telephone:
  (972) 850-0780

  	
   

  
	
   

  	
  Fax
  No.: (972) 392-2722

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  If
  to the Holder:

  	
   

  
	
   

  	
  ComVest
  Capital, LLC

  	
   

  
	
   

  	
  One
  North Clematis, Suite 300

  	
   

  
	
   

  	
  West
  Palm Beach, Florida  33401

  	
   

  
	
   

  	
  Attention:
  Chief Financial Officer

  	
   

  
	
   

  	
  Telephone:  (561) 868-6074

  	
   

  
	
   

  	
  Fax
  No.:   (212) 829-5986

  	
   

  



 


9

















 


Any party shall have the
right from time to time, and at any time, to change its address for the receipt
of notice by giving at least five (5) days’ prior written notice of the
change of its address to the other parties in the manner specified herein.


 


9.                                      Successors.  All the covenants, agreements,
representations and warranties contained in this Warrant shall bind the parties
hereto and their respective heirs, executors, administrators, distributees,
successors, assigns and transferees.


 


10.                               Law
Governing.  THIS
WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.


 


11.                               Entire
Agreement; Amendments and Waivers.  This Warrant, together with the Registration
Rights Agreement of even date herewith executed by the Company for the benefit
of the Holder, sets forth the entire understanding of the parties with respect
to the subject matter hereof.  The
failure of any party to seek redress for the violation or to insist upon the
strict performance of any term of this Warrant shall not constitute a waiver of
such term and such party shall be entitled to enforce such term without regard
to such forbearance.  This Warrant may be
amended, and any breach of or compliance with any covenant, agreement, warranty
or representation may be waived, only if the Company has obtained the written
consent or written waiver of the Holder, and then such consent or waiver shall
be effective only in the specific instance and for the specific purpose for
which given.


 


12.                               Severability;
Headings.  If any term
of this Warrant as applied to any person or to any circumstance is prohibited,
void, invalid or unenforceable in any jurisdiction, such term shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or invalidity
without in any way affecting any other term of this Warrant or affecting the
validity or enforceability of this Warrant or of such provision in any other
jurisdiction.  The Section headings
in this Warrant have been inserted for purposes of convenience only and shall
have no substantive effect.


 


[The remainder of this page is
intentionally blank]


 


10

















 


IN WITNESS WHEREOF, the
Company has caused this Warrant to be duly executed as of the
           day of July, 2008.


 


	
   

  	
  CRDENTIA CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John B. Kaiser

  
	
   

  	
   

  	
  Name:
  John B. Kaiser

  
	
   

  	
   

  	
  Title:
  Chief Executive Officer

  



 


11

















 


ANNEX A


 


NOTICE
OF EXERCISE


 


(To be executed upon partial or full

exercise of the within Warrant)


 


The undersigned hereby
irrevocably elects to exercise the right to purchase
                    
shares of Common Stock of Crdentia Corp. covered by the within Warrant
according to the conditions hereof and herewith makes payment of the Exercise
Price of such shares in full in the amount of
$                            .


 


	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  (Signature of Registered Holder)

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
					



 

















 


ANNEX B


 


CASHLESS
EXERCISE FORM


 


(To be executed upon partial or full


exercise of Warrants pursuant to Section 1.3 of the Warrant)


 


The undersigned hereby irrevocably elects to surrender
                        
shares of Common Stock of Crdentia Corp. purchasable under the Warrant for
                  
shares of Common Stock issuable in exchange therefor pursuant to the Cashless
Exercise provisions of the within Warrant, as provided for in Section 1.3
of such Warrant.


 


Please issue a certificate or certificates for such
Common Stock in the name of, and pay cash for fractional shares in the name of:


 


(Please print name, address, and social security number/tax
identification number:)


 


and, if said number of shares of Common Stock shall
not be all the shares of Common Stock purchasable thereunder, that a new
Warrant for the balance remaining of the shares of Common Stock purchasable
under the within Warrants be registered in the name of the undersigned Holder
or its transferee as below indicated and delivered to the address stated below.


 


	
  Dated:

  	
   

  	
   

  
	
   

  
	
  Name
  of Warrant Holder or transferee:

  	
   

  
	
   

  	
  (Please
  print)

  
	
   

  
	
  Address:

  	
   

  
	
   

  
	
  Signature:

  	
   

  
							



 


NOTICE:                The signature
on this form must correspond with the name as written upon the face of this
Warrant in every particular, without alteration or enlargement or any change
whatsoever.


 

















 


ANNEX C


 


PUT OPTION EXERCISE FORM


 


(To be executed upon exercise of the Put Option


pursuant to Section 1.4 of the Warrant)


 


The
undersigned hereby irrevocably elects to require Crdentia Corp. to purchase 80%
of the Warrant No. CV-2 pursuant to the Put Option provisions of the
within Warrant, as provided for in Section 1.4 of such Warrant.


 


Please
send cash in the amount of the Option Purchase Price by wire transfer of
immediately available funds to:


 


(Please print name,
address, and social security number/tax identification number:)


 


Wire transfer
instructions:


 


(insert wire
instructions)


 


 


	
  Dated:

  	
   

  	
   

  
	
   

  
	
  Name of Warrant Holder or
  transferee:

  	
   

  
	
   

  	
  (Please
  print)

  
	
   

  
	
  Address:

  	
   

  
	
   

  
	
  Signature:

  	
   

  
							



 


NOTICE:                The signature on this form must
correspond with the name as written upon the face of this Warrant in every
particular, without alteration or enlargement or any change whatsoever.


 

















 


ANNEX D


 


ASSIGNMENT
FORM


 


FOR VALUE RECEIVED the
undersigned registered owner of this Warrant hereby sells, assigns and
transfers unto the Assignee named below all of the rights of the undersigned
under this Warrant, with respect to the number of shares of Common Stock set
forth below:


 


	
  Name and Address of Assignee

  	
   

  	
  No. of Shares of

  Common Stock

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


and does hereby irrevocably
constitute and appoint
                                              
attorney-in-fact to register such transfer onto the books of Crdentia Corp.
maintained for the purpose, with full power of substitution in the premises.


 


	
  Dated:

  	
   

  	
   

  	
  Print
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  
	
   

  	
  Witness:

  	
   

  
							



 


NOTICE:                The signature
on this assignment must correspond with the name as written upon the face of
this Warrant in every particular, without alteration or enlargement or any
change whatsoever.